A Year Into Legalization, Brazil’s Illegal Betting Market Hasn’t Moved
São Paulo Governor Tarcísio de Freitas told a roomful of hospital union members on August 19 that Brazil should ban online betting platforms entirely.
“Either Brazil ends gambling, or gambling ends Brazil,” he said, comparing the industry to tobacco and citing an unsourced claim that Brazilians commit 20% of their income to betting.
Freitas is running for reelection this year, which matters because he’s not the only person in Brazilian politics who has decided betting makes good campaign material in 2026.
Lula Wants the Same Thing, From the Opposite Side
President Lula’s government has been pushing its own bill to ban online casino games since spring, distinct from Freitas’s broader call to kill sports betting too, but aimed at the same underlying target. We covered the president’s push to roll back Brazil’s regulatory framework in March, and that push escalated through July without slowing.
Two politicians who agree on almost nothing else, a leftist president and a conservative governor positioning himself for a possible national run, have landed on the same conclusion: an 18-month-old regulated betting market should not exist.
While they agree on the outcome they want, they disagree on why. Lula’s framing is economic: an industry extracting money that households don’t have. Freitas’s framing is public health, betting as an addiction on par with cigarettes. Both conclusions arrive at the same place and are reasons many opponents of betting expansion in the US routinely cite.
The Regulator Is Still Trying to Fix It Anyway
While politicians campaign against the law, Brazil’s Secretariat of Prizes and Betting is still writing rules for it. A new ordinance expected this week bans autoplay features, forces a five-second gap between consecutive bets, removes celebratory sound effects like the noise of coins falling, bans platforms from pre-filling suggested deposit amounts, and prohibits displaying leaderboards of top winners.
That follows advertising restrictions that took effect in July and a retroactive tax proposal that blew up in October, when a last-minute rewrite of the operator tax bill was rejected 231 votes to a handful, leaving a R$20.9 billion hole in projected 2026 revenue. The head of Brazil’s National Association of Games and Lotteries called the whole episode a lesson in why “changing fiscal rules without due process creates legal uncertainty.”
The industry has since proposed its own set of tax alternatives rather than wait for another version of that fight, and operators are already working through a scheduled tax climb from 13% this year to 15% by 2028.
The Illegal Market Never Actually Shrank
Here’s what should worry regulators more than any campaign speech. Brazil’s legal betting market launched on January 1, 2025, with 14 licensed operators and now has more than 80. That’s real growth, and know-your-customer onboarding, a mess in the market’s first months, has gotten noticeably smoother since.
But the illegal market, the one legalization was designed to pull players out of, still holds an estimated 41% to 51% of total betting volume, even after authorities blocked more than 18,000 unlicensed sites. A regulated market that can’t get channelization past roughly half after eighteen months isn’t simply failing to grow; it’s failing at the one job it was built to do.
Flutter’s $350 Million Bet Is Caught in the Middle
Flutter completed its acquisition of 56% of NSX Group, the parent of Betnacional, for roughly $350 million in May 2025, betting that Brazil would become one of its biggest markets outside the US and UK. A Brazilian court has already ruled on one lawsuit involving NSX Group, with more litigation still open.
None of that instability is fatal on its own, but a company that just spent nine figures establishing a foothold in Brazil now has to underwrite the risk that its own president tries to ban half its product line, that a leading opposition figure wants the whole business gone, and that the tax rules keep changing mid-year.
Brazil didn’t legalize betting because politicians loved the idea of a regulated gambling industry. They did it because an unregulated one already existed and taxing it seemed better than pretending it didn’t. Eighteen months later, the unregulated version is still roughly half the market, the regulated version is under attack from its own government, and the politicians attacking it can’t agree on why it should go, only that it should.
That’s not a market in crisis; it’s a market that never got the one thing legalization was supposed to deliver: enough of a shift out of the shadows to make the fight worth having.
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